THOMSON REUTERS
Westlaw Today
Enter to open, tab to navigate, enter to select
The dawn of a new unified European patent system
2023 PRINDBRF 0150
• Practitioner Insights Commentaries
• March 24, 2023
(March 24, 2023) - Barnes & Thornburg LLP attorneys Angela B. Freeman, Rory P. Pheiffer, Matthew S. Gibson and Dominic Yobbi provide a detailed analysis and explain the significance of the new one-stop shop being implemented on the European continent for patent owners.
The Unitary Patent (UP) and Unified Patent Court (UPC) are the primary pieces of patent reform in Europe created to centralize a European patent system for enforcement and validity actions. While the efforts to centralize patent protection in Europe began over a decade ago, it was not until Feb. 17, 2023, that the final step to ushering in the new era of the UP and the UPC fell into place. Specifically, the German government ratified the international UPC agreement instituting the same.
This new European patent system will now enter into force on June 1, 2023. These new changes in European patent laws are important for proprietors of European patents and will affect: 1) currently granted and validated European Patents (EPs); 2) patent applications currently pending at the EPO; and 3) future European patent filings. Action to prepare for the new system should begin in earnest for patent owners and applicants.
The legal framework for the UP and UPC is based on two European Union (EU) regulations: EU Regulation Nos. 1257/20121 and 1260/2012.2 After adoption of these regulations, the rules establishing the Unitary Patent Division at the European Patent Office (EPO), procedures for requesting and obtaining a UP, and the associated fees were also adopted in 2015.
To date, additional procedural and systematic infrastructure have been established, such as appointment and training of UPC judges, formation of the Presidium, and election of the president of the UPC Court of Appeals and the UPC Court of First Instance. With the European infrastructure in place, the onus is now on patent owners and applicants to take action to ready their patent portfolios for the new UP/UPC system.
The new system provides a new type of patent, the UP, which is an EP with unitary effect in all UPC contracting member states (CMS). This new system also provides the UPC, a new central court with exclusive jurisdiction over UP and EP patent cases in Europe, except for patent cases based on national rights, where exclusive jurisdiction remains with national courts. Therefore, the UPC is considered a "one-stop-shop" to obtain maximum patent protection in all CMS with reduced complexity and cost.
The UPC opens its doors on June 1, 2023. However, starting March 1, 2023, the Sunrise Period began, marking the first opportunity for patentees to opt out of this new court system. The UPC is expected to change the landscape of patents in the European Union (EU) and it will serve as a common EU court that will hear patent litigation and validity disputes.
This new system is only open to EU member states and not all European countries have agreed to join the UPC. So, there will be additional strategic considerations for non-UPC countries. As of Feb. 17, 2023, 17 countries have ratified the UPC agreement: Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovenia, and Sweden.
It is anticipated the number of European countries will grow over time, possibly by up to 25 or more CMS, because at least seven other EU member states (e.g., Cyprus, Czech Republic, Greece, Hungary, Ireland, Romania, and Slovakia) have agreed to join, but have not yet ratified.
Notably, Croatia, Poland, and Spain have opted out of the UP/UPC while Albania, Iceland, Liechtenstein, Monaco, North Macedonia, Norway, San Marino, Serbia, Switzerland, Turkey, and the United Kingdom were not eligible to participate.
Patent proprietors will not be forced to choose a UP over traditional European validation patents. However, if coverage is desired in non-UPC countries, additional national validations using existing EPO validation procedures will be required. The EPO is formally entrusted with administration of the UP.
What does the UPC mean for patent filers?
With the new system, a patentee is able to bring an enforcement action based on an EP or UP in a single court when infringement occurs in at least one of the CMS. On the other hand, the UPC also provides a mechanism to centrally revoke patent rights and/or obtain an injunction in all CMS.
While the UPC will open its doors on June 1, there is a transition phase of at least seven years before the UP and UPC are fully implemented. During this time, patent filers will have flexibility in implementing a patent protection strategy.
Once the transition period ends, patent filers will still have the choice of the UP versus the traditional EP, but the new court will have exclusive jurisdiction for all patent cases (EPs and UPs) in the CMS.
What does the UPC mean for patent licensors, licensees and joint owners?
Although UPs and the UPC have been more than 10 years in the making, it is anticipated that few license agreements and joint invention agreements explicitly detail how UP and UPC decisions for implicated patents and patent applications should be made.
However, license agreements and joint invention agreements likely detail which parties should handle decisions about patent prosecution and patent litigation. Patentees should consider revisiting those agreements to determine if the language is clear enough to define which party is the lead decision-maker regarding whether to utilize UPs or opt out of the UPC, and/or what consultation should occur prior to making such decisions.
Notably, for jointly owned patent applications, all patent owners must sign a UP request, and all owners must agree to opt out of the UPC for the opt-out to be effective. Thus, if a joint invention agreement is not clear about how to handle a situation where co-owners may not necessarily agree on one or more of these decisions, the issues may become complicated.
Joint owners are encouraged to consider reviewing joint invention agreements to determine the effect of controlling clauses on these UP/UPC decisions. Joint owners should also engage co-owners as these UPC decisions should attempt to build consensus without having to necessarily rely upon enforcement aspects associated with the joint invention agreements.
For license agreements, licensees do not have to sign paperwork to indicate their agreement with a UP or UPC decision. However, it is likely beneficial for the partnering relationship established by a license agreement for all parties to discuss and try to agree upon a strategy as it relates to pursuing UPs and/or opting out of the UPC. Patent owners should consider discussing these issues with their licensees to achieve consensus on a UP filing and/or UPC enforcement approach via a patent-family-by-patent-family basis.
Affirmative opt-out provisions
Failure to take action with respect to the UPC during the transition phase means existing patents will automatically be under UPC jurisdiction. Patentees must affirmatively opt out of the UPC jurisdiction to avoid the UPC. During the transition period, and preferably during the Sunrise Period, patentees must affirmatively opt out of the UPC to avoid it — even for validated EPs that pre-date the new system.
Even before the UPC opens its doors, opt-out requests can be filed. This has been the case since the start of the Sunrise Period on March 1, 2023. The advantage to opting out prior to June 1 is that the opt-out will take effect from June 1, the first day of entry into force of the UPC. Accordingly, opting out prior to June 1 means there is no risk to be sued before the UPC.
The new rules also allow the opt-out to be withdrawn up until 30 days before the end of the transition period. In other words, owners can opt out and later opt in, allowing owners to observe this new system first. In particular, patentees may choose to opt out of the UPC currently to observe the new UPC rules in action before subjecting their patents to the rules.
This opt-out is available during the entirety of the transition phase, i.e., at least seven years, provided certain restrictions have not occurred. Only traditionally validated EPs can be opted-out of the jurisdiction of the UPC. A patentee cannot opt out of UPs and one cannot opt out of EPs or UPs if litigation has commenced.
Opting out, while merely an administrative task, nevertheless requires great care. The opt-out needs to be filed in the name of the true proprietor of the patent, even if the European patent register still shows a previous proprietor.
Due diligence to determine the identity of the true proprietor of a patent may be time-consuming, particularly in situations where patent portfolios have been acquired and the chain of title has not always been under the control of the current owner and/or true proprietor of the patent.
Opting out of the UPC is time-sensitive to prevent central revocation, invalidation, or if considering enforcement actions, especially if the patentee has communicated with European entities about infringement.
Existing and granted European patents
Any existing EP is not eligible for UP conversion, so the relevant question is one of jurisdiction for enforcement actions for these assets. During the transition phase, each EP will be in a mixed jurisdiction situation where both the respective national courts and the UPC have jurisdiction, and the first seized court is the court in which a dispute is heard.
Enforcement will occur only in countries in which a patent is validated. In validated countries that are non-CMS (e.g., UK), the national court has exclusive jurisdiction. In validated CMS, patentees can bring actions in the UPC or the national court of the country where the infringement is occurring (the latter only if no action was previously filed with the UPC).
After the transition phase, the mixed jurisdiction in UPC member countries will no longer exist and the UPC will have exclusive jurisdiction for all patents that have not previously been opted-out. There is no change for non-UPC countries.
Pending and future applications at the EPO
Patent applicants can currently request a delay to grant any pending patent in Europe until after the UPC goes into effect if a UP is of interest. The applicant can then either move forward with an EP or UP. For an EP in non-UPC countries, the same current EP validation options will apply and require separate national validations.
However, for a UP, there will be several changes. For example, a patentee will pay a single UP annuity fee for protection across all 17+ UPC member states. The cost of the UP annuity is estimated to be similar to the cost of an EP patent with four (4) validations.
If a patentee has interest in protection in more than four European CMS, a UP may be advantageous over traditional EP validations from a cost perspective. These UPs will have exclusive jurisdiction under the UPC in CMS with no option to opt out. Final fees and registration as a UP is due one month after patent grant.
Key considerations
Here are some additional key advantages and disadvantages for UP and UPC:
• Advantages
(1) No additional costs to register UP at the EPO
(2) Coverage across all CMS (17 at beginning) for the price of approximately four national validations
(3) Potentially reduced translation costs compared to national validations
(4) Centralized platform for infringement actions covering 17 CMS — simpler and reduces costs
(5) Judges with significant patent experience
• Disadvantages
(1) Uncertainty in legal outcomes — UPC case law not established
(2) Higher annuity costs (if validation is desired in less than three countries)
(3) Centralized platform for validity challenges — one action can eliminate the patent rights in all CMS
(4) Does not cover all EPC member states
(5) UP cannot be opted out from UPC jurisdiction
Here are some additional key advantages and disadvantages for EP (UPC opt-out; in EP national court):
• Advantages
(1) No central revocation of patent rights — invalidation on country-by-country basis
(2) Established case law in each country
(3) Option to withdraw opt out at later date
(4) Lower litigation costs if enforcement planned in only one or two CMS
• Disadvantages
(1) Litigation is potentially more complex, inconsistent, and expensive because enforcement is on a country-by-country basis
(2) Higher annuity costs (if validation is desired in more than four countries)
In light of these recent and upcoming changes to the European patent protection and enforcement landscape, patentees are encouraged to understand how the UP and UPC may affect their patent filing, protection, and/or enforcement strategies in Europe and how to proactively address these effects to maximize protection for their patent portfolios.
Strategic UP considerations regarding European countries of interest, whether those countries have ratified the UPC agreement, and respective costs should be coupled with standard EP validations to define an optimal protection and/or enforcement plan for each patent proprietor.
This plan should be considered on a patent-portfolio-by-patent-portfolio basis. Patentees should consider consulting with foreign or domestic legal counsel to ensure compliance and to learn more about the UP and UPC changes.
This article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.
Notes
1 https://bit.ly/3z1TCiT
2 https://bit.ly/3z3PFKl
Angela B. Freeman is a partner in Barnes & Thornburg LLP with a background as a biologist. She assists clients in protecting and enforcing highly technical intellectual property worldwide, particularly in the food and beverage, agricultural, pharmaceutical, life sciences and biotech, and clean energy industries. Her practice also includes agreements and opinions and performing IP due diligence, and post-grant proceedings and oppositions, as well as IP portfolio management and maintenance. She is based in the firm's Indianapolis office and can be reached at [email protected]. Rory P. Pheiffer is a partner in the firm's Boston office who helps clients develop patent portfolios, domestically and abroad, that align with their business goals. He also counsels clients on patent opinion and product clearance matters and IP due diligence issues on the buyer and seller side. He is a mechanical engineer who works with clients on a wide range of devices and systems, including those related to medical devices, 3D printing, aircraft, robotics, wind turbines and software. He can be reached at [email protected]. Matthew S. Gibson, a partner in the firm's Dallas office, has more than a decade of experience. As a registered patent attorney, he assists life science clients with procurement, licensing and other technology transfer transactions, prelitigation counseling and case analysis, and freedom-to-operate studies. He also applies his client-focused approach to challenging or defending patents in patent office proceedings, including inter partes reviews. He can be reached at [email protected]. Dominic Yobbi, an associate in the firm's Indianapolis office, assists clients with a range of IP needs, particularly in the preparation and prosecution of patent applications. He can be reached at [email protected]. The authors would like to thank Michael J.A. Leinauer for his contribution to this article.
)
Angela B. Freeman)
Rory P. Pheiffer)
Matthew S. Gibson)
Dominic Yobbi| End of Document | © 2024 Thomson Reuters. No claim to original U.S. Government Works. |